Republicans Move to Kill Extractive Anti-Graft Rule

Congressional Republicans are planning to kill a U.S. Securities and Exchange Commission rule on oil, gas and mining companies that experts say prevents corruption in the resource sectors.

The rule, which was established by the Dodd-Frank Act, requires oil, gas and mining companies to disclose the payments they make to foreign governments for things such as licenses and permits needed for development. Activists and industry observers have said for years such payments can be used to hide bribes to secure business. The rule is set to go into effect in 2018; its first iteration was killed off in a lawsuit filed by the oil industry, and the SEC later rewrote it after a nonprofit sued to force the agency to act.

House Majority Leader Kevin McCarthy, (R, Calif.), in an op-ed published Wednesday in The Wall Street Journal, wrote the House of Representatives will "take the ax" to the rule, saying it "adds an unreasonable compliance burden" on American energy companies that doesn't apply to their foreign competitors.

"This rule, which closely mimics a regulation already struck down by the courts, would put American businesses at a competitive disadvantage," he wrote.

Lawmakers would use the Congressional Review Act to repeal the rule, Mr. McCarthy said in the op-ed. That law gives Congress the right, with a simple majority vote, to overturn rules finalized in the past 60 legislative days. The SEC approved the rule on extractive disclosure in late June, which falls within the 60-day legislative deadline.

At the time of the rule's passage, the Natural Resource Governance Institute had noted in a statement that many U.S.-listed companies already reported such payments under European rules, but the SEC rule would extend it to another 425 companies, including Exxon Mobil Corp.

Exxon lobbied against the rule as far back as 2011. The company opposes the U.S. rule as rewritten, according to the transparency page on its website. Its former chief executive, Rex Tillerson, is President Donald Trump's pick for secretary of state; his nomination cleared a significant hurdle in the U.S. Senate, where he awaits a full floor vote. The question of extractive disclosure came up briefly during the end of Mr. Tillerson's confirmation hearing, but he didn't answer a question about it.

Activist groups slammed the move. Jana Morgan, director for the U.S. chapter of the Publish What You Pay coalition, said the move, coming on the heels of the attempt to dismantle the Office of Congressional Ethics, "sends a very disturbing message" about House Republicans' commitment to fighting corruption.

"Why are Republicans prioritizing voiding an anti-corruption rule that has been adopted in 30 other countries around the world when the message the Trump administration ran on was one of ‘draining the swamp’?" she said.

Simon Taylor, co-founding director of the group Global Witness, said in a statement that the move on the extractive rule and the nomination of Mr. Tillerson show "not only do [the administration and Congress] think corruption is perfectly acceptable, but that they intend to become proactive enablers of corruption."

Write to Samuel Rubenfeld at Samuel.Rubenfeld@wsj.com. Follow him on Twitter at @srubenfeld.